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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Shortage
Break-even Point
Necessity
2. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Surplus
Shortage
Price floor
Determinants of elasticity
3. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Short run
Perfectly inelastic
Dead Weight Loss
Natural Monopoly
4. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Opportunity Cost
Demand for Labor
Complementary Goods
Monopoly
5. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Marginal tax rate
Economic Growth
Price inelastic demand
Oligopoly
6. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Utility Maximizing Rule
Market Economy (Capitalism)
Law of Increasing Costs
Spillover costs
7. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Constrained Utility Maximization
Average Fixed Cost (AFC)
Perfectly elastic
Explicit costs
8. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Cartel
Constrained Utility Maximization
Normal Profit
Spillover benefits
9. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Dead Weight Loss
Scarcity
Oligopoly
Resources
10. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Marginal Productivity Theory
Positive externality
Absolute prices
Constant cost industry
11. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Break-even Point
Marginal Productivity Theory
Excess Capacity
Price elastic demand
12. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Inferior Goods
Law of Demand
Fixed inputs
Producer surplus
13. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Marginal Product of Labor (MPL)
Free-Rider Problem
Non-collusive oligopoly
Implicit costs
14. The additional benefit received from the consumption of the next unit of a good or service
Constant cost industry
Marginal Benefit (MB)
Opportunity Cost
Accounting Profit
15. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Variable inputs
Inferior Goods
Average Total Cost (ATC)
16. Ed = 8 - infinite change in demand to price change
Substitution Effect
Constrained Utility Maximization
Perfectly elastic
Fixed inputs
17. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Substitute Goods
Total Revenue
Law of Diminishing Marginal Utility
Profit Maximizing Rule
18. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Surplus
Absolute Advantage
Normal Profit
Subsidy
19. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Excess Capacity
Economic Growth
Unit elastic demand
Private goods
20. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Excise Tax
Surplus
Comparative Advantage
21. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Positive externality
Total variable costs (TVC)
Normal Goods
22. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Substitution Effect
Long Run
Perfectly competitive long-run equilibrium
Average Product of Labor (APL)
23. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Price inelastic demand
Surplus
Scarcity
24. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Law of Increasing Costs
Profit Maximizing Rule
Market power
25. The difference between total revenue and total explicit and implicit costs
Shortage
Economic Profit
Monopoly long-run equilibrium
Negative externality
26. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Law of Increasing Costs
Determinants of elasticity
Cartel
Absolute Advantage
27. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Producer surplus
Total Welfare
Allocative Efficiency
Profit Maximizing Resource Employment
28. The ability to set the price above the perfectly competitive level
Price Elasticity of Supply
Market power
Perfect competition
Price Ceiling
29. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Revenue Test
Marginal Cost (MC)
Total variable costs (TVC)
Increasing Cost Industry
30. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Cross-Price Elasticity of Demand
Variable inputs
Marginal Productivity Theory
Negative externality
31. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Producer surplus
Normal Goods
Excise Tax
Comparative Advantage
32. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Marginal Cost (MC)
Complementary Goods
Determinants of elasticity
Four-firm concentration ratio
33. AVC = TVC/Q
Price Elasticity of Supply
Total Revenue Test
Economic Growth
Average Variable Cost (AVC)
34. Ed = (%dQd)/(%dP). Ignore negative sign
Fixed inputs
Law of Increasing Costs
Price elasticity
Price Ceiling
35. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Consumer surplus
Monopoly long-run equilibrium
Monopsonist
Determinants of elasticity
36. A good for which higher income decreases demand
Absolute Advantage
Perfect competition
Excise Tax
Inferior Goods
37. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Perfectly elastic
Perfectly competitive long-run equilibrium
Private goods
Productive Efficiency
38. The output where ATC is minimized and economic profit is zero
Variable inputs
Average Fixed Cost (AFC)
Allocative Efficiency
Break-even Point
39. All firms maximize profit by producing where MR = MC
Marginal Resource Cost (MRC)
Total Product of Labor (TPL)
Marginal Benefit (MB)
Profit Maximizing Rule
40. Costs that change with the level of output. If output is zero - so are TVCs.
Diseconomies of Scale
Total variable costs (TVC)
Natural Monopoly
Price elastic demand
41. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Welfare
Inferior Goods
Average Fixed Cost (AFC)
Total Fixed Costs (TFC)
42. The imbalance between limited productive resources and unlimited human wants
Scarcity
Excess Capacity
Natural Monopoly
Market power
43. ATC = TC/Q = AFC + AVC
Relative Prices
Average Total Cost (ATC)
Scarcity
Price discrimination
44. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Monopoly long-run equilibrium
Income Elasticity
Law of Demand
Law of Supply
45. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Determinants of elasticity
Economics
Marginal Benefit (MB)
Necessity
46. The sum of consumer surplus and producer surplus
Total Welfare
Price inelastic demand
Monopolistic competition long-run equilibrium
Total variable costs (TVC)
47. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Total variable costs (TVC)
Law of Demand
Specialization
Utility Maximizing Rule
48. Ed = 1
Oligopoly
Determinants of Labor Demand
Unit elastic demand
Derived Demand
49. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Increasing Cost Industry
Perfectly elastic
Negative externality
Absolute prices
50. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Economics
Public goods
Price Ceiling
Derived Demand